through paperwork to locate everything you are searching

for. ]]>

Great link. Thanks.

]]>You might want to check out this: http://acad88.sahs.uth.tmc.edu/research/publications/TTT-cs98.pdf ]]>

Suppose I give you a problem where you pick a number x in [0,10] trying to maximize your utility which is increasing in x. This is very easy. But now suppose you have to pick any real number x and your utility is increasing in f(x) where f:R->[0,10] is some surjective but super complicated function. Clearly it is the “same problem” but if f is sufficiently complicated we will get a very different outcome.

Now, suppose we play one of two games.

Game A: you pick x in [0,10], you get x, I get 10-x.

Game B: you pick x in R, you get f(x), I get 10-f(x).

These two versions of the Dictator game vary along two dimensions:

1. They are different for the same reason that the two decision making problems above are different. This has nothing do with games per se.

2. They are different because picking a large f(x) does not display bad manners the way that picking a large x does (I stipulate). This is related to the framing results by Ariel Rubinstein (http://arielrubinstein.tau.ac.il/papers/73.pdf)

1. If the illusion had been stubborn, like the Allais Paradox, you would have been on to something very interesting about backwards induction.

2. The term Tversky and Kahneman used for this was “invariance”. Unfortunately, they are known more for providing counter-examples to axioms of rationality than raising the more important question of when we can expect invariance in decision making, what to do when we cannot, and should/ought improve decision making by relying on techniques which require invariance.

3. All experiments in game theory should be testing invariance and not whether agents are predictable by game theory standards. Take a group of people, get x% acting as if they were game theorists. Modify the game with something game theory says is irrelevant, and see how many people now act as if they were game theorists, %y. If x is much different from y, ask Tom Schelling why what game theory thought was not relevant turned out to be relevant. Publish and repeat – with different iterations of Tom Schelling.

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